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people. It seems incongruous, with such a tremendous surplus of butter on hand, that these small bits are served. The labor cost in serving them must exceed many, many times the cost of the butter. Is that taken into account in your advertising program, to get them to be more generous?
Mr. WALTZ. Very definitely. I have an answer to that one. I just make them bring me some more pats. I am not bashful. I think, Mr. Chairman, that that completes the presentation of this particular question.
If you wish me to I shall be glad to attempt to describe the disposal program that I proposed about 2 weeks ago to the Benson Task Committee that I feel has some merit in the disposal of the present accumulated butter, and which program can also, I think, be adapted to disposal of cheese, to some extent at least, a little more complicated in cheese.
It does not fit in too well with the nonfat solids inventory but certainly somebody else can come up with an idea, too. So I think we ought to find a way to get rid of that as well.
Mr. ANDRESEN. We thank you, Mr. Waltz, for your presentation. You will have the opportunity to revise your remarks and if there is something that you left out in the explanation we would like to have you include whatever you might have omitted, in support of the statement that will be printed.
We would like to have your plan fully explained so that it can be understood and generally read by members of the committee and others who might be interested in the printed copy of the hearings.
I would like you to tell the group of your own experience in trying to increase the sale of butter.
Mr. WALTZ. I thank you for the opportunity of reviewing what I have said before it is printed, because I am sure that it can be very substantially improved.
We were asked-we had a so-called 90-man task committee and I was on that one also and we were asked about the programs for disposal of accumulated dairy products inventories in the hands of the Secretary.
We met. A lot of plans were proposed but it is hard to get your teeth into them and actually move any products with them. They were pretty generalized-more advertising, more promotion, and that sort of thing.
There is nothing wrong with that except that is a long-term program and won't immediately move the inventories of the Government.
Another suggestion was to eliminate all price supports and let milk products drop to wherever they will go and you will wash out the production by decreased selling prices.
I am certain that one will work but I am also certain it will bankrupt a very great number of dairy producers in this country and will set up a shortage situation whereby consumers might benefit immediately by these lower prices but they will probably pay for it in the end by very greatly increased prices when there are inadequate supplies because farmers could not survive.
We had 2 or 3 other meetings and at the next to the last meeting 2 plans were proposed but they did not have the approval of the entire group.
One of them was that we would operate on a wash-sale basis, or actually going backwards, the Government would pay a subsidy to producers through plants, actually, thereby reducing the price of butter.
This was largely directed at butter. It is my personal position, and it has also been the position of the National Milk Producers Federation that it is opposed to subsidies, either direct subsidies to producers or indirect subsidies.
We had the rollback during the war, we also had the direct producer subsidy and we had the maintenance of low prices of dairy products throughout the war which gave consumers a false idea of the value of dairy products.
When subsidies were eliminated prices had to go back up to return to farmers approximately the prices they were getting through the subsidy route, and it was such a shock to consumers that our first difficulties began as far as high prices on butter were concerned.
That is the background on why I personally and I am sure members of the federation are opposed to any form of subsidy now. We feel that we should collect the value of dairy products at the market place.
The other plan that was proposed was that we would have a fire sale, so-called, whereby we would take the Government inventory of butter and wrap it with a Government wrapper and require the housewife to not require, but if she would buy a pound of butter at the regular price she would get a Government pound free.
The physical difficulties in attempting to engage in such a program on a nationwide basis convinced all of us who had been engaged in distribution for many years that it was hopeless, and it could not be made to operate.
I can give you many reasons why it won't work but I don't believe you are interested.
It was proposed at the last meeting about 2 or 3 weeks ago that we take the Government butter and make it available back to the distributors at a reduced price; that the Government officials establish that price.
The distributor of the butter would then be required and would certify and with proper protection against fraud to take that butter at whatever price the Government put on it, blend it with his present costs of butter-which are about the present support level-and come up then with an average weighted price of the two.
That would put in the Government's hands the power to drop the price of butter whatever amount they determined was proper. Actually they could drop it a small amount to start with, a little more later.
Now we hear a lot of comments that 5 cents down on butter may sell it, or 10 cents might be required, or 15 cents, but nobody knows. Butter is selling today at 10 cents a pound less than it did a year ago. Our sales I think are about the same as they were a year ago.
So 10 cents has not substantially increased consumption of butter. The Government could follow down and find at what level butter sold. It would at least know that.
They have 250 million pounds in inventory. As they got toward the short end of that inventory they could gradually raise the price and bring it back up to whatever the support level is determined to be
as of next year. That is a practical, quick method for disposing of all the butter the Government has, if price will sell it.
There are a lot of little side ramifications in it, Mr. Chairman, but I think that basically gives you a description of the program that I recommended to the committee about 2 or 3 weeks ago, and that is my personal recommendation.
It is not a recommendation approved by the National Milk Producers Federation because the federation has had no meeting since this plan was developed to approve or disapprove.
Mr. ANDRESEN. Have you increased the sale of butter for your organization?
Mr. WALTZ. Yes, sir.
Mr. ANDRESEN. How did you go about that?
Mr. WALTZ. By maintaining the highest quality of butter that we could possibly produce-93 score within our wrapper all the time; by, I think, a somewhat intelligent advertising and sales promotional program throughout the last 25 years, and I am very happy to say to you that we are selling more butter today than we sold at any time since we have been in business.
I am unhappy to say that I suppose in our area as in other places per capita consumption is down but I think some of that can be attributed to some poor quality of product that is on the market, and some plans have been suggested for handling some of the poorer grades of butter that are on the market.
In addition to that in our State, through this assessment fee that we levy against producers for sales promotion we put on a campaign asking consumers to fill in the words "Why butter is better."
The first prize was a trip to Honolulu for a man and his wife. Other prizes were a year's supply of butter to the winner. There was about 50 years' supply of butter or 50 prizes of 1 year each, some food mixers and so forth.
The cost was very nominal, it was under $10,000 for the entire campaign, and we stimulated butter sales, I believe, the last figure I saw, by about 33 percent during one of the weeks of this campaign as against an average sale of previous weeks.
So I think advertising and promotion works in the sale of butter. Mr. ANDRESEN. How long has that campaign been running? Mr. WALTZ. It is over now. It ran, as I remember it, for 4 to 6 weeks. I cannot be sure.
Mr. ANDRESEN. Did you check on the purchases to see whether or not there were people who had been including substitutes?
Mr. WALTZ. Yes.
Mr. ANDRESEN. And who were buying butter again?
Mr. WALTZ. As well as we could we had people in the stores interrogating the people and we did find quite a number of people who wanted to enter this contest.
Remember this was not at a reduced price at all. They had to pay the full price for the butter. But they had to enclose with their answer a wrapper off of a pound of butter, or a piece of butter, to qualify their entry into the campaign.
We ran it long enough, for 6 weeks, so that it was not a case of getting them all to buy at once and then not buying later, which they would not do anyway.
They had plenty of time to enter the contest.
Mr. ANDRESEN. Why wouldn't that campaign be a good idea for all the producers of the country, for instance, in selling their butter? Mr. WALTZ. That is exactly the kind of thing that I mentioned awhile ago that it would be possible to do if we had our own self-help program in operation.
As of today, you have no way of collecting funds from the dairy farmer on any kind of an equitable basis to do anything. There are a great many dairy producers who contribute voluntarily to the American Diary Association and the American Dairy Association is doing an excellent job with the funds that they have available in promoting the sale and consumption of all dairy products.
Mr. ANDRESEN. They are collecting several million dollars from the farmers. You stated that it was just a nominal expense. seems to me that it would be a good idea for the American Dairy Association to follow the pattern that you set.
Mr. WALTZ. We hope they do.
Mr. ANDRESEN. I have been talking that for the last 6 or 7 months. Mr. WALTZ. We considered it an extremely successful campaign in our State.
Mr. ANDRESEN. I would like at some time in the future to go into greater detail with you on what you have developed. Of course, I think there are methods. If they follow the pattern of some of these soap companies they will be able to sell a lot of butter and get rid of all their surpluses.
Mr. WALTZ. I think we will have to learn to sell.
Mr. LOVRE. Mr. Chairman?
Mr. ANDRESEN. Mr. Lovre.
Mr. LOVRE. Mr. Waltz, I certainly agree with your statement if supports were dropped completely and the price were permitted to seek its own level, that it would bankrupt the farmers of our country because we cannot expect the farmers to buy in a protected market and sell in an open market.
That being true, do you feel that the 90 percent support program should be continued on dairy products until such time as we come up with a self-help plan like you have advocated or some other plan that will give to the farmers full parity?
Mr. WALTZ. Yes, sir; I certainly do and I would like to make this statement: the National Milk Producers Federation has for many years gone on record as being in favor of a flexible price-support program for agriculture.
We do feel that since there is a rigid support program on feed grains, and so forth, for the coming year that parity on dairy products effective April 1, 1954, should be announced at 90 percent and carried through by the Government to give equitable treatment to dairying with all other agriculture, and we certainly hope that Congress will permit us to run our own program by giving us this self-help program or something that is better.
Mr. LOVRE. And until such time as that happens, it is the view of the Milk Producers Association that the present 90 percent support program on dairy products should be continued?
Mr. WALTZ. As long as it is maintained on other products.
Mr. WALTZ. Yes, sir.
Mr. ANDRESEN. That action was taken at your annual convention, making that recommendation?
Mr. WALTZ. Yes, sir.
Mr. ANDRESEN. So that your organization would not favor reducing the support price on dairy products below the present fixed level until the new program would be developed?
Mr. WALTZ. Either a new program or the self-help program is developed. Then we have no need for Government support prices. Or until there is some change in the fixed supports on the basic crops. Mr. ANDRESEN. It may take time for Congress to assimilate any new self-help program. It may be difficult to get that into operation before April 1. I am sure you recognize that fact.
Mr. WALTZ. Yes, sir; we do.
Mr. ANDRESEN. In view of that situation, you do make the recommendation for your organization to continue the present 90 percent support?
Mr. WALTZ. Yes, sir; I do that.
Mr. ANDRESEN. Are there any other questions?
Mr. BYRNES. I have just one question on this table showing the relative costs or relative position of the farmer under the Governmentsupport program and under your self-help program.
If I understand you correctly
Mr. WALTZ. Is that the last page?
Mr. BYRNES. Yes, it is. You have two tables on one page. If I understand this correctly under the self-help program the cost to the individual farmer on 100 pounds of milk under the self-help program would be 14 cents, that is, 90 percent of parity base being used for $3.92 average cost per hundred.
Mr. WALTER COTTON. If both Government and the self-help were at 90 percent, and the losses on the self-help program were 100 percent the cost to the producer would be 14 cents.
Mr. BYRNES. Fourteen cents a hundredweight.
Mr. WALTER COTTON. Yes, sir.
Mr. BYRNES. And using 100 billion pounds as the general amount in the market?
Mr. WALTER COTTON. That the assessment would be spread over, Mr. BYRNES. That is about $140 million.
M. WALTER COTTON. That is right.
Mr. BYRNES. If you could run a self-help program, this program, at an annual cost of $140 million, and still give the farmer 90 percent of parity, that is pretty cheap compared to the system we presently have, is it not? What does it cost the Government today in the dairy field to maintain 90 percent of parity under its purchase program, and assuming all its purchases would be 100 percent loss this last year?: Mr. WALTER COTTON. The quantity bought here is 3 billion pounds. That is the estimated excess during 1954. The quantity bought during the current marketing year is in excess of that. The amount, of surplus for 1954 is estimated at 3 billion pounds by the Department of Agriculture. During the current marketing year it has been about twice that amount.
Mr. BYRNES. The excess each year is based on the billion pounds of milk.
Mr. WALTER COTTON. On the 3 billion pounds of milk estimated to be bought.